RUKMANGADHAR REDDY,CHENNAI vs. ITO SALARY WARD II(3), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -12, Chennai, dated 28.02.2019 and pertains to assessment year 2011-12.

Shri N. Vijay Kumar, the Ld. representative for the assessee, submitted that the assessee is a medical professional. According to the Ld. representative, apart from pension, the assessee also received consultation charges from hospital. As per the information available, the assessee was in receipt of ₹11,40,450/- after deducting TDS to the extent of ₹1,16,598/-. By oversight, according to the Ld. representative, this consultation charges of ₹11,40,450/- was not disclosed to the Department. However, when it was pointed out during the course of assessment proceeding, according to the Ld. representative, it was offered for taxation and the assessee also paid the taxes, therefore, there cannot be any levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

On the contrary, Ms. G.D. Jayanthi Angayarkanni, the Ld. Departmental Representative, submitted that the consultation charges of ₹11,40,450/- was admittedly not disclosed to the Department in the return of income. Therefore, it is a clear case of concealment of income. Only after issuing notice by the Assessing Officer, according to the Ld. D.R., the assessee admitted the income and paid the taxes. Had the return not been selected for scrutiny, the income would not have been subjected to tax at all. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the penalty levied by the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee has received ₹11,40,450/- towards consultation charges from hospital apart from pension. In the return of income, the assessee has disclosed only the pension and the consultation charge was not disclosed to the Department. It is not in dispute that the tax was deducted at source. Therefore, it is obvious that the payment of ₹11,40,450/- to the assessee was well within the knowledge of the Department. The tax deducted from the consultation charges paid by the hospital was disclosed to the Department by way of TDS return by the hospital. Therefore, it cannot be said that the assessee has intentionally concealed any part of his income. When the tax was deducted and the TDS return was filed, no one can say that there was any intention to conceal the income or part of income.

The question arises for consideration is when the assessee by oversight omitted to disclose the consultation charges which was subjected to TDS, whether there was any concealment of income or furnishing of inaccurate particulars of income? The Apex Court examined this issue in Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012) 348 ITR 306 and found that by inadvertent mistake, when the income was not disclosed to the Department that cannot be a reason to levy penalty. In view of this judgment of Apex Court, this Tribunal is of the considered opinion that an inadvertent omission to disclose the income which was subject matter to TDS cannot be a reason to levy penalty under Section 271(1)(c) of the Act. Therefore, we are unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below are set aside and the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act is deleted.

In the result, the appeal filed by the assessee stands allowed.